Economic Funamentals supported record breaking St. John’s real estate

December 5, 2008 · Filed Under Market Trends, St. John's Investments and St. John's Real Estate 

Good economic fundamentals have supported record breaking real estate activity in Newfoundland and Labrador in 2008. Despite concerns over the global economy that surfaced in October, home buyers continued to enter the real estate market en masse, bolstered by positive future prospects and Newfoundland’s new status as a ‘have’ province. While most other Canadian centres made the transition to buyer’s markets in 2008, conditions in St. John’s continued to favour the seller.  First-time and move-up buyers worked in tandem throughout the year, stimulating sales in virtually all price ranges. Homes priced in excess of $250,000 were particularly robust, up 78 per cent over levels reported in 2007. Tight inventory, heated demand, and in-migration have all been behind the push for housing in the provincial capital in recent years.

Residential home sales in the province are expected to post the only gain in the country by year-end, with the number of homes sold climbing a substantial 11 per cent to 4,950 units, up from 4,471 one year ago. Housing values are also forecast to experience a serious upswing in 2008, rising 21 per cent to $180,000, an increase of over $30,000 from 2007’s historic high.

The Williams effect on the overall economy—the pro business stance that has led to job security, declining unemployment levels, tax cuts and renewed confidence in Newfoundland and Labrador – has been nothing short of remarkable.  Capital projects contributing to the economic well-being of the province include Newfoundland LNG’s first natural gas trans-shipment and storage terminal near Grassy Point, valued at an estimated $1.5 billion; Vale Inco’s $2.17 billion plan to build a nickel processing plant in Long Harbour using hydromet technology—a more energy efficient, smelting method to extract nickel from Voisey’s Bay concentrated in Labrador; and the historic memorandum of understanding with the Innu Nation that will eventually lead to the development of the Lower Churchill hydroelectric mega project worth an estimated $6 billion.
Hebron will contribute $16 billion to the provincial economy over its 25-year life, and $7 billion for the Canadian economy. New home construction has also been brisk, with housing starts in the province expected to grow to 3,100 by year-end 2008 and taper back to more normal levels of activity in 2009.

With the provincial economy operating at full throttle, residential real estate in St. John’s is forecast to flourish.  Consumer confidence is expected to remain high throughout 2009.  Smart leadership and business opportunities should serve to attract even greater investment in the province.  Migration is forecast to climb as more and more jobs are created.  Seller’s market conditions should prevail in 2009, with vendors commanding larger deposits and builders asking and getting at least five per cent down for new construction.

The upper-end of the market should also thrive as higher wages translate into more expensive housing. About 4,700 homes are projected to change hands in 2009, down marginally over 2008 levels. Average price is expected to continue to climb, rising 12 per cent to $202,000 in 2009.

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Comments

3 Responses to “Economic Funamentals supported record breaking St. John’s real estate”

  1. Gerard Hagan on December 6th, 2008 3:02 am

    Wow, amazing to see how different things are out east. Glad to hear the market fundamentals are good for your clients.

  2. Ryan Philipenko on December 6th, 2008 4:48 pm

    Nice to see how healthy the market is in Newfoundland, I’m really a big fan of your blog.

    Ryan Philipenko – Edmonton Real Estate

  3. Rich Mundle on December 23rd, 2008 6:56 pm

    Didn’t realize the market was so healthy out there, that’s awesome. Maybe the oil industry taking off is part of it?

    Rich Mundle – Sherwood Park Real Estate Agent

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